TechZone360

HP: Ditch Most Enterprise Hardware, Go 3D Printing

This morning, Oct. 1, a ZD Net piece excoriated HP executives for failing to deliver a "narrative" on future PC and printer strategies for the enterprise/business arena. I had two different light bulb moments as I read it: HP needs to get out of the "enterprise" PC hardware business, and it needs to jump into 3D printing. Like, yesterday.

Anyone with half a brain has noticed that PC sales are declining, be it desktop or laptop hardware. HP, I gather from the article, seems to want to throw more and different types of specialized models for the business world at the problem. ZD's Zack Whittaker probed for deep strategic thinking from HP execs during a briefing covering the rollout of new enterprise-aimed notebooks and printers – and got a whole lot of nothing.

HP's numbers are down across the board year-over-year, even in the cash cow world of printing. HP's printer division brings in about 21 percent of the company's earnings, but is down by 4 percent, said Whittaker.

What emerged from Whittaker's conversation was a picture of BYOD driving printer features, with mobile devices such as tablets and smartphones not playing well with the classic IT printer infrastructure. HP is planning to add the ability to print using near-field communications (NFC) and using Wi-Fi ad-hoc networking.

But this drifts into a meta-point HP seems to have missed: BYOD is eating away at its traditional business desktop hardware, as people go to tablets, ultrabooks, and notebooks. HP intends to add incremental products – the kiss of death in my view – over the next five months, rather than consolidate notebook and laptop offerings.

Someone at HP missed the memo about economies of scale. Given that HP is only making four percent profit margin on hardware, trying to make a bunch of little customized pieces means you make less per unit. It may own a particular niche with some bell or whistle, but in an age where apps and software drive services and requirements, you’ll have to have a lot of different customized pieces to hold onto market share.

What HP needs to do is to build a single line of laptops for both consumer and enterprise use, otherwise it is ultimately going to collapse from the weight of having to produce and support hundreds of different models. About the only areas it should continue to produce dedicated business IT hardware are servers and high-volume printers. You need only look at BlackBerry's rapid fall from grace to see that hardware specialization is not a survival feature if you are trying to sell into both consumer and business markets.

Having said that, why do I think 3D printing is probably the best bet HP can make today? First, HP knows the logistics and business models of traditional printing inside and outside. The same basic principles apply to 3D printing. Profit is made not by selling printers – not that there's anything wrong with making money by selling printer hardware – but by the continuing recurring sales of supplies. Some businesses and individuals will end up being heavy makers and that's ongoing profit, month-after-month, year-after-year.

Second, HP has a solid brand. How many non-3D people can name two other 3D printer companies beyond Maker-bot? Everyone knows HP can build solid, reliable hardware and support it on a worldwide basis. Three-D printing is all about local, so there's plenty of growth potential both in traditional markets as well as in Asia and Africa.

Finally, HP still has designers and engineers galore it can put to good use on a brand new market. The company could build a business sustainable for decades, starting with entry-level 3D printers using plastics and walk its way up to high-end models using wire or metal powder.

Unfortunately, I have little faith HP can move fast enough to establish itself in the 3D printer market. It would take a bold vision, leadership willing to shake up the apathetic status quo in the company, and a desire to be a winner in a market with a lot of upside – all qualities HP seems to lack these days.